Missouri electric customers deserve all the protection they can get. But one of the few protections they currently enjoy is under heavy fire from a utility giant and its friends on the Public Service Commission.
At issue is a law that requires electric utilities to actually start producing power from a new plant before it can hike rates to pay for the plant’s construction. That law is sometimes called CWIP, pronounced quip, which stands for “construction work in progress.”
Think of it as an incentive to encourage good management practices by utility companies. CWIP makes utilities shoulder some of the risks of building a new plant. If they manage construction efficiently and get plants up and running quickly, they are rewarded. So are their customers, who avoid millions of dollars in unnecessary expenses. If plant construction is handled inefficiently and drags on, only the utility takes a financial hit.
Most states that regulate utilities address the construction issue through regulatory policies. Missouri is one of the few that has written the protections into law.
Now, AmerenUE wants to do away with CWIP, and it’s getting backing from an unlikely source: the chairman of the state agency responsible for protecting electric customers.

CWIP was approved overwhelmingly by Missouri voters in 1976 after a citizens’ initiative drive put it on the ballot. It was a reaction to years of delays and hundreds of millions of dollars in cost overruns during AmerenUE’s construction of its nuclear plant at Callaway.
Callaway is a baseline plant, one that runs all day, every day. Since it began operating, no other major baseline plants have been built in this part of the state. So far, that hasn’t been a problem.
But projections indicate that within two decades, demand for electricity could outstrip supply. Because the cost of building a new power plant is so high and because construction takes so long, planning for a new plant to meet the expected demand must begin soon.
Concerns about future emissions caps on greenhouse gases mean that AmerenUE probably couldn’t get financing for a new coal-fired plant. Natural gas is another option. It emits less carbon dioxide than coal but costs more to operate than nuclear plants.
So AmerenUE would like to build an additional nuclear facility at Callaway. It would cost an estimated $6 billion, with perhaps another $3 billion in financing costs, and take up to 10 years to plan, design and build. It’s unlikely that AmerenUE could borrow that much money. Even if it could, the debt could create serious cash-flow problems: Under CWIP, AmerenUE would have to absorb the costs during the decade the project was in the works.
In the past, state regulators eased utilities’ cash flow problems by allowing them to collect higher taxes during construction and re-pay those taxes after a project was built. But federal tax reforms in 1986 eliminated that option.

AmerenUE is framing the current debate as an all-or-nothing choice: Unless CWIP is repealed, it says, it won’t build a new plant.
But repealing CWIP would shift the risks of construction from utilities to consumers — who have no control over those risks. The Missouri Public Service Commission found a better solution in 2005 — back then, it was less of an industry poodle — when it reached an innovative deal on Kansas City Power & Light’s new Iatan 2 coal-fired power plant.
Iatan 2 cost $2 billion, too much for the utility to finance without help. But instead of demanding that consumer protections be repealed, KCP&L held open meetings with the PSC and representatives of consumer and business groups.
The parties reached an agreement that satisfied Wall Street creditors and protected electric customers. It allowed KCP&L to depreciate construction costs sooner than it otherwise would have, a move that preserved the company’s cash flow and allowed it to obtain financing for its new plant.
AmerenUE could do the same thing. The PSC, which is supposed to look out for the interests of both electric customers and utilities, should insist on it. Instead, PSC Chairman Jeff Davis told Post-Dispatch reporter Jeffrey Tomich that he favors changing CWIP. He said doing away with the protection would benefit consumers. Judging from past actions, Jeff Davis talking about consumer protection is like Jesse James talking about bank security.
There can — and should — be vigorous debate about whether nuclear energy is the right solution for Missouri’s future energy needs. But there’s no justification for stripping away important consumer protections.
Instead of allowing AmerenUE to shift risks onto ratepayers, the PSC should demand that it meet in public with utility regulators and consumer representatives. Working together, they can reach a deal everyone can live with.

Post-Dispatch file photo of Callaway Nuclear Power Plant